Business houses urged to comply with new anti-money laundering regulations

Businesses in Bahrain will now need to submit their report on compliance with the requirements of the Anti-Money Laundering (AML) regulations as the Kingdom steps up fight against money laundering and terror financing. An additional report will need to be prepared by businesses to confirm their compliance with the anti-money laundering practices to the authorities. Recent instructions from the authorities require companies to have practices to combat money laundering and terror financing in place. Speaking to Tribune, Partner at BDO Nath Venkitachalam explained the new requirements.

“Most of the companies in Bahrain are either governed by the Central Bank of Bahrain or the Ministry of Industry, Commerce and Tourism’s laws and regulations. “The authorities, as part of their commitments to curb money laundering and terrorist financing activities, now require businesses to have certain anti-money laundering procedures. As part of this, the authorities have made it mandatory for all the companies in Bahrain to have their own internal procedures for customer identification, KYC, customer due diligence along with other AML practices.

“The authorities want this compliance to be reported on an annual basis along with the audited financial statements that are submitted to the authorities. “These regulations will cover all the companies including the SMEs and the companies will now need to submit the additional AML compliance report,” he pointed out. Explaining some of the expected procedural requirements, he said, “Audit firms have to report on various aspects including the appointment of Anti-Money Laundering Reporting Officer (MLRO), availability of company’s AML policies and framework, offering training to staff on AML practices, internal and external reporting on suspicious transactions etc.”

When asked about report submission, he said, “Once the statutory audit for the financial year 2018 is completed, the AML compliance report needs to be submitted in 2019 along with the audited financials to the authorities.” He said that the lack of awareness on AML practices will be a challenge. “Many companies are not aware of the new requirements though Bahrain authorities are busy in raising public awareness about this. They have also asked us to join hands in spreading awareness on AML compliance requirements.” He added that SMEs may face a challenge due to their various inherent limitations. “This is where I feel there is a bigger area of concern.

The SMEs may need additional training and help as compared to a bigger organisation, which may be able fulfil the new requirements in a timely manner. “Considering this, the focus of guidelines and training should be on SMEs. The Bahraini regulatory authorities have taken the responsibility to spearhead the awareness campaign and audit firms will be complementing the Ministry’s efforts. “Though in the first year, we expect certain teething issues, we are confident that these will eventually get regularised as and when people and business understand the requirements.” In order to ensure effective compliance with relevant standards and to preserve Bahrain’s strong reputation as a well-regulated financial centre, the CBB maintains a Compliance Directorate, which is tasked with leading the CBB’s AML/CFT efforts.

The Compliance Directorate is also tasked with handling complaints received from the public relating to CBB licensees, and for receiving information on financial crimes, such as fraud attempts. “The Central Bank of Bahrain views the fight against money laundering (‘AML’) and combating the financing of terrorism (‘CFT’) as a key priority. Bahrain is part of the Financial Action Task Force (‘FATF’) through the full membership of the Gulf Cooperation Council in the FATF, and is committed to the implementation of all international standards in this area. Bahrain is also a founding member of the regional MENA-FATF, and hosts its secretariat,” CBB states in its website.

“The Ministry of Industry, Commerce and Tourism (MOICT), with strong determination to prohibit and actively prevent money laundering and the financing of terrorism, deploys the highest operating standards and laws to ensure that all its activities are undertaken within the legal parameters,” says MOICT website. “We at the ministry aim to maintain the highest standards to safeguard the interests of Bahrain. We have established an anti-money unit to ensure that we are well-equipped to combat money laundering, the financing of terrorism, and any other related financial crime through continuous updates to our procedures, systems, technology, and staff training.”